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(Interactive Chart) Hellish Headlines in Japan and Europe Do Not Affect Forex Wave Counts
Our EUR/JPY analysts focus on Elliott wave patterns instead of debt crisis fears and nuclear woes
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By Jill Noble
Fri, 29 Jul 2011 16:45:00 ET |
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How do you decide when to enter or exit a forex trade? If you're like many forex speculators, you spend a lot of time reading about each country’s economic prospects, or other "fundamentals."
Elliott Wave International's forex analysts pay no heed to the headlines. Instead, they alert subscribers to opportunities based on technical chart patterns -- like the “ending diagonal,” one of the 13 known Elliott wave patterns.
This idealized depiction of an ending diagonal is excerpted from Jim Martens' online, on-demand trading course "How to Use the Wave Principle to Maximize your Forex Trading":
You know all about Europe's mounting debt and Japan's struggles with natural and nuclear disasters. Those news stories make the idea of trading the euro and yen sound risky.
And it is; all market speculation is risky. Yet while the "fundamentals" will often leave you guessing about market direction, technical analysis -- such as the Elliott wave method -- helps you get a much better grasp on what's ahead.
Earlier this month, two Currency Cross Rates analysts of our Currency Specialty Service team, Jack Martin and Robert Kelley, spotted a “classic” ending diagonal for subscribers in the EUR/JPY charts.
As you can see, their forecasts take advantage of the ending diagonal pattern – with absolutely no mention of the "fundamentals." Objectively, they spotted the opportunity based only on a key pattern from the Elliott Wave Principle book (p. 37):
An ending diagonal occurs primarily in the fifth wave position at times when the preceding move has gone “too far too fast,” as Elliott put it. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
A contracting diagonal takes a wedge shape within two converging lines. This most common form for an ending diagonal is [shown above] in its typical position within a larger impulse wave.